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Friday, April 20, 2018

South Loop Rental Market "Challenged" in next 12 to 18 Months?

We were driving around the South Loop recently and were surprised about the scale of all the buildings going up in the neighborhood. Yes, we've posted about them and spent a lot of time talking about them on Sloopin, but seeing all of them in the wild made us do a double take.

Along those lines, we were reading a recent post on The Real Deal about Chicago's real estate market and the development (both actually happening and proposed). One thing that was called out was whether there is an oversupply. According to a quote, some are thinking the South Loop could have a problem:

At the far end of the downtown area, in the South Loop, new inventory could present a bigger challenge.

Crescent Heights is building a 792-unit rental tower called One Grant Park in an area that includes a 479-unit project being built by Oxford Capital and several other large rental projects.

The projects will bring thousands of new units to a part of Downtown that doesn’t have as much of a longstanding history as a residential area as neighborhoods like Streeterville or the Gold Coast.

“I think the South Loop is going to have a few challenges 12 to 18 months from now,” Integra’s Ron DeVries told Crain’s in February.

While that might be true, a bigger question in our mind is whether the oversupply will eventually get absorbed. While it's impossible to tell, we naturally are very bullish here.

Upon that same trip where we were struck by all the developments, we were also amazed by the amount of foot traffic on stretches of the neighborhood that historically were light. That seems like a good thing for the vitality of the neighborhood...which we assume would be good for the real estate market.